The recently unveiled Ford Mustang Mach E will start to be profitable “on the number one car,” said Ford CEO Jim Hackett in an interview with Bloomberg after the Ford Sunday Mach E.
Hackett said that the cost of the car will be lower than the proceeds from its sale from the very beginning. The line of vehicles should still cover the initial cost of R&D before it becomes “profitable” for the company, but this is true for any line of vehicles.
Hackett noted that this should surprise many, because "the electricians did not have a history of making money." We heard about this from other manufacturers. Many justify themselves by pulling their legs on electric cars, because "no one does them profitably."
But in fact, Tesla made a profit even from the original roadster. Since Tesla has grown rapidly since then, the positive margin they receive on their cars, as well as as much money as they could raise, has returned to the growth of the company, which is currently operating quite profitably.
Even other vehicles that produce “losses” per unit of output for their company are often worth projects for various reasons. If they were not, companies probably would not have sold them.
First, electric cars help reduce emissions in the company's fleet, which protects them from penalties for harming public health (which is obviously better for society).
Secondly, these programs help companies strategically position themselves on the inevitable electric future. Long-term planning is important.
So all this talk of profit is a little redundant, but it's nice to see Ford dispel the myth that electric cars cannot be made for profit. The fact that the company transferred this car from concept to production in less than three years and will be able to do it with profit is extremely impressive.
Hackett was also asked why Mach E would be built in Mexico. This is interesting since we recently announced Ford's union agreement that said Mustang derivatives would be built in Flat Rock, Michigan. At the time, we assumed that this included Mach E, but it would obviously take Ford some time to expand its electrification efforts in US plants.
They will need to move fast, as Hackett said in an interview that Ford plans to become carbon neutral by 2030. The company has big plans to start selling more electric cars in China and Europe in addition to the United States.
When manufacturers claim that nobody makes electric cars profitably, they often discount Tesla, saying that they do some kind of voodoo mathematics (also known as “growing a company at a rate of 50% + per year, which is usually expensive ").
But when it comes to voodoo mathematics, manufacturers and the media often come up with their own voodoo mathematics to convince themselves that electric cars are not profitable. Just a couple of months after the original Volt was released, the headline said that Chevy was losing $ 40,000 per car, which is an absurd amount.
Of course, the demand itself was absurd, because it divided the cost of all research and development of the car only into the first few thousand units. Each vehicle (and, in fact, basically every “widget” of any type) ever made paid a certain amount of R&D costs, which must be paid back before you start making money. Only after you have sold a product for some time, you can bring some profit.
Former Fiat CEO Sergio Marchionne made similar statements about the Fiat 500e, which he said lost $ 14,000 for the car sold. If this is true, then why did he continue to sell them? Perhaps because his company would have been less profitable if he had not sold them, as he would have been punished (even more) for driving the least efficient automaker in the United States – which means that 500e did not actually lose his company money in the end, in a holistic sense.
By the way, Marchionne also said that Fiat may have a rival Model 3 on the road for 12 months if the car is profitable. Marchionne is no longer going to restrain his company’s efforts to produce electric vehicles, but unfortunately we still haven’t seen this car, despite the fact that Tesla proved that the Model 3 could be profitable, right, a little over 12 months ago.
I would like to suggest another reason as to why Ford is able to make this car profitable: because they actually trying,
When other manufacturers claim that they cannot produce cars with a profit, this usually happens because they invest a lot of money in an incompetent Frankenstein car. They wedge expensive, low-cost components into already built cars, with all the design and packaging compromises that accompany it.
Then, surprisecars are unattractive to consumers, and the company is still not trying to sell them. They wonder why no one needs a machine that they hardly think about, and then invest in green-flushing campaigns in only one state (California), which is one of the more expensive media markets where this is done.
And the cost of all these R&D and marketing is distributed between several thousand cars that they barely clean when they sell, because in reality they are not trying very hard to sell the car. Unsurprisingly, they “don't make money” on cars; they seem to be actively sabotaging their ability to do so.
This applies not only to electric vehicles, but also to any changes in the automotive industry. They are so stubborn in the evolution of the automotive industry that they will increase their own efforts by lobbying for one change, then lobbying for the change for which they lobbyed, then changing their minds for the third time. Fortunately, Ford, BMW, Honda and VW finally came to their senses and accepted the obvious change that was coming.
Toyota is a suitable example in this area. They claim that they are developing a lot of electric cars, but they are publishing illiterate science advertising against electric cars. They then lobby against fuel economy standards as opposed to their false “green” image. They are doing everything they can to make their work harder, simply because they are stubborn and most likely there will be no change in the automotive industry.
Therefore, many of the major automakers prefer to simply continue to produce the same cars with a 1% improvement in some pointless indicators every model year and will never be forced to go off the incredibly narrow path that they have built for themselves over decades of complacency.
And this is the problem of the entire automotive industry, with the exception of Ford. In fact, having made some efforts to create a good car with a good brand, and having thought in advance about marketing, production, sales and customer support, they managed to create a car that they can be sure will work well for them. and that consumers respond well to them and even make them some money.
Much remains to be seen, much remains to be done until the end of 2020, when this car sets off. But it looks like Ford has chosen another great idea to steal from Tesla: the idea actually trying to make a good car, Who would have thought.
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